At the time of starting its business, a company has only a cash account of $120,000 and a common stock account of $120,000 (par value: $1 each). The company issues new shares of $20,000 to the public at a price of $3. However, after the public offering, the share prices decline to $2.3. The company decides to buy back 8,000 of its shares. Assuming that the company applies par value method for accounting for treasury shares, what would be the total shareholders’ equity in the balance sheet at the end of all of these transactions? A) $41,600 B) $158,400 C) $161,600 D) $172,000 E) Other (please specify)
At the time of starting its business, a company has only a cash account of $120,000 and a common stock account of $120,000 (par value: $1 each). The company issues new shares of $20,000 to the public at a price of $3. However, after the public offering, the share prices decline to $2.3. The company decides to buy back 8,000 of its shares. Assuming that the company applies par value method for accounting for treasury shares, what would be the total shareholders’ equity in the balance sheet at the end of all of these transactions? A) $41,600 B) $158,400 C) $161,600 D) $172,000 E) Other (please specify)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the time of starting its business, a company has only a cash account of $120,000 and a common stock account of $120,000 (par value: $1 each). The company issues new shares of $20,000 to the public at a price of $3. However, after the public offering, the share prices decline to $2.3. The company decides to buy back 8,000 of its shares. Assuming that the company applies par value method for accounting for treasury shares, what would be the total shareholders’ equity in the balance sheet at the end of all of these transactions?
A) $41,600
B) $158,400
C) $161,600
D) $172,000
E) Other (please specify)
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